Dr Geraldine A. Spiteri Lucas, Chief of the Legal and Enforcement Unit, Malta Business Registry
Around the world many countries have created, or have plans to create, registers on beneficial owners of companies registered in their jurisdiction. The concept of beneficial ownership exists because the registered shareholder of a company is not necessarily the person ultimately controlling and benefitting from the company. A beneficial owner is any natural person who ultimately owns or controls that body corporate or body of persons through direct or indirect ownership of 25 per cent plus one or more of the shares or more than 25 per cent of the voting rights or an ownership interest of more 25 per cent in that body corporate or body of persons or through control via other means. Senior managing officials can also be treated as beneficial owners where the above criteria cannot be determined. The role of registers in tackling financial crimes such as money laundering, terrorist financing, tax evasion, bribery, corruption and fraud, consists in preventing not only illicit financial flows but also people from hiding their assets.
In Malta, such a register was created by virtue of Legal Notice 374 of 2017. Back then, this register was only accessible by competent authorities, subject persons, and persons with legitimate interest. However, all EU members states, by virtue of the 5th AML Directive, had until January 2020 to make public the beneficial ownership of companies. In Malta, beneficial owners of companies can be accessed through the Malta Business Registry’s portal at https://registry.mbr.mt/ROC/
Since then, and over the past two years, the Companies Act (Register of Beneficial Owners) Regulations (“Regulations”) have been amended to enhance the obligation put on the Registrar of Companies (“Registrar”) to ensure that the information about beneficial owners of companies is adequate, accurate and up-to-date.
Recent amendments that took place to these Regulations were published on 16 June 2020. These amendments reflect the recommendations made by the Financial Action Task Force (FATF) in a paper entitled Best Practices on Beneficial Ownership for Legal Persons issued in October 2019. The FATF paper has been given importance when it comes to amending the Regulations, since the FATF is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction.
The Regulations impose on companies the obligation that when they submit a declaration containing information on the beneficial owners of a company, or when they submit a notice of change in the beneficial ownership of a company, apart from being duly completed and signed by at least one director of the company or the company secretary, a certified true copy of the official identification document must also be submitted to Registrar for every beneficial owner. On top of this, the identification document must be Government-issued, while the certification that the identification document provided to the Registrar has to be a true copy of the original must be completed by a regulated professional such as a notary, advocate, auditor or accountant.
It is also critical that every company shall obtain, and at all times hold, adequate, accurate and up-to- date information in respect of its beneficial owners; this information must also be submitted to the Registrar. To this end, a new obligation is being introduced whereby a company must, upon each anniversary of its registration, file an annual confirmation of its beneficial owners and their details, which will be listed in the register on beneficial owners of companies held by the Registrar. This is done to highlight any change in the details when it comes to beneficial owners, such as their name, country of residence, or official identification document number, or to confirm that no change in details took place. Upon completion, the return is to be signed by at least one director of the company or the company secretary and delivered to the Registrar for registration within 42 days of the company’s made update. Annual confirmation is requested over and above the other obligations imposed on companies, so as to inform the Registrar whenever there is a change in the beneficial owners.
The Registrar has gained new powers under these Regulations. He may now ask for additional information or documents before registering a beneficial owner in the register on the beneficial owners of companies. One is to note that self-declared information is not accepted by the Registrar. If companies fail to provide beneficial ownership information in accordance with the Regulations, the Registrar shall reject a company from being incorporated and, in the case of existing companies, will not register any statutory notices for that company and will proceed to strike the company’s name off the Register. The Registrar is also empowered to restrict new incorporations for directors involved in other Maltese-registered companies that failed to submit information on their beneficial owners.
In order to ensure accurate and current information, the Registrar has initiated physical on-site investigations from January 2020, so as to establish companies’ current beneficial ownership and to verify that the beneficial ownership information submitted to him in respect of a company is accurate and up to date. The Regulations, as amended, ensure that such right shall not be restricted, obstructed or precluded in any manner. However, this is not the only way that the Registrar can ensure that the information is correct. The register on beneficial owners of companies is accessible online, therefore competent authorities and subject persons have direct access and may crosscheck the information they have in their possession with that registered with the Registrar. In case of discrepancies they are obliged to report to the Registrar.
In addition to the above, if a company fails to provide information or has provided false information on beneficial ownership, it is also subject to administrative penalties. These Regulations have increased the penalties imposed for such defaults up to €100,000. In order to facilitate reporting by companies to the Registrar, these Regulations have amended the statutory notices established by law and included additional ones.
The amended and new statutory forms can be accessed from https://mbr.mt/promo/official-registry-forms/
The MBR's webinar on the Register of Beneficial Owners
9:00am The Role of the MBR Mr. Joseph Farrugia Registrar, Malta Business Registry
9:10am Risk Assessment Dr. Helga Buttigieg Debono Executive Head, National Coordinating Committee
9:40am Register on Beneficial Owners of commercial partnerships Dr. Geraldine Spiteri Lucas Chief Legal Officer, Malta Business Registry
10:15am Coffee Break
10:30 Webinar's Keynote Speech Hon. Silvio Schembri Minister for Economy, Investment and Small Businesses
10:45am New forms for disclosure of Beneficial owners of commercial partnerships Dr. Deandra Schembri Senior Manager, Legal and Enforcement Unit, Malta Business Registry
11:05am Register on Beneficial Owners of legal arrangements Dr. Petra Camilleri Senior Manager, Supervision of Trustees & CSPs, Malta Financial Services Authority
11:35am Register on Beneficial Owners of Foundations and Associations Dr. Maria Schembri Senior Professional Officer, Foundations and Associations, Malta Business Registry
12:05pm Onsite Supervision Mr. Andrew Schembri Head, Compliance Unit, Malta Business Registry
12:25pm Question Time The MBR's Webinar on the Register of Beneficial Owners
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